The secretary of the Department of the Treasury (DH), Francisco Parés Alicea, reported that the preliminary net income for the General Fund during the fiscal year 2019-2020 totaled $ 9,288.5 million.
Although the revenues of the last two quarters of this fiscal year were affected by the earthquakes and the pandemic, these exceeded the revised projection of the Fiscal Control Board by $ 276.4 million or 3.1 percent.
"In January 2020, Puerto Rico was struck by a major earthquake proportions and their aftermath that impacted the southern area of the island. In March, Governor Wanda Vázquez Garced, by executive order declared a state of emergency in the face of the Covid-19 pandemic, the total closure of large commercial sectors and the touch curfews that lasted for the remaining fiscal period. However, we present a proactive and solidary response in order to mitigate the insufficiency in the liquidity of cash, of a slowed down economy, granting a package of local measures of incentives directed to the sectors that were totally or partially prevented from operating "Said the secretary.
Consistent with these initiatives, as explained by Parés Alicea, tax exemptions on prepared foods (IVU) and on basic hygiene goods were approved, exemptions from the payment of IVU on imported merchandise were approved for reselling and deferrals for the payment of the tax on almost all the main tax rates. "These measures of deferrals and concessions are estimated to represent a relief for businesses and taxpayers of over $ 750 million."
On May 9, 2019, the Fiscal Control Board certified a fiscal plan, in which net income was projected for the General Fund of $ 10,405 million for fiscal year 2019-2020.
On May 27, 2020, the board presented a revision to this fiscal plan. In this review, $ 9,012 million is projected for the fiscal year 2019-2020, a reduction of $ 1,393 million or 13.4 percent compared to what was the original projection of $ 10,405 million considered in the May 2019 plan.
The review of the board responded to the reverse that supposed for the economy of Puerto Rico the earthquakes that shook Puerto Rico throughout the month of January and the declaration of a state of emergency decreed by the pandemic in March that forced the partial closure of an important segment of the economy and reduced and altered consumption patterns. Therefore, the estimated components of the drop in collections include the effect of temporary or permanent administrative measures, as well as the economic effect caused by the closure due to curfews that affected consumption, employment and production patterns. This last effect is estimated for purposes of the collection base at over one billion dollars or 56 percent of the projected reduction.
The secretary distinguished the behavior of collections in two periods such as, the period prior to the earthquake and the pandemic, and the period after these events from February.
“During the period from July to January of the fiscal year, the performance of the collections reflected vigorous growth, exceeding the original projection by $ 667 million or 13 percent . The total income reached for the first seven months of the fiscal year amounted to $ 5,954.6 million, reflecting an increase compared to the same period of the previous year of $ 838.3 million or 16.4 percent.
In this period, the behavior of the tax on corporate income, which exceeded in comparison with the previous fiscal year what was collected in $ 719.8 million and what was projected in $ 658.8 million or 59.5 percent. This also reflected a growth of $ 112.7 million or 11 percent in the income tax of individuals, this compared to the original forecast of the board and $ 110.3 million or 10.7 percent compared to fiscal year 2018-2019, "the official detailed.
Likewise, Parés Alicea emphasized that, during this first period, the tax lines related to consumption, such as motor vehicle taxes, foreign entities tax and others, exceed the projected by $ 71.4 million, $ 26 million and $ 113 million, respectively.
On the other hand, the head of the Treasury indicated that, during the second period, from February to June, in which the collections contain, the economic effect of the pandemic and the earthquakes and the effect of the measures of deferred payments and exemptions on assets granted, the drop experienced in collections represented $ 2,926 million with respect to the same period of fiscal year 2019 and $ 1,784 million with respect to the projection o riginal. In other words, a drop from the forecast of 35 percent.
However, due to the surplus reached during the first period of $ 666 million, this drop was cushioned by reducing the difference from the original projection of $ 10,405 million by one decrease of 10.5 percent.
“When considering the projection that, as a result of these two effects, the Fiscal Oversight Board reviews on May 27, 2020 ($ 9,012 million), the Department managed not only to reach it but to exceed it in $ 276.4 million, "said the secretary.
Finally, Parés Alicea indicated that at this moment" we superimposed on any other interest, the safeguarding of the socio-economic integrity of our people. To do this, we assume an empathetic leadership role with the situation that the people are going through, focusing our administrative policy on the execution of initiatives to alleviate the economic effects of the pandemic and implementing deferral measures in the tax obligation ".